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HMRC's November Nudge letters

Since 2000, HMRC has been sending “one to many” (OTM) or “nudge” letters to taxpayers which it describes as “the process of issuing a common message designed to positively influence customer actions” as part of its “promote, prevent, respond strategy”.

These letters are sent where HMRC perceives risks to compliance but in circumstances where a one-to-one approach would not be cost effective.

In such situations, HMRC uses the OTM approach to reach a large number of it’s customers, for example to:

•        highlight specific errors that it often sees customers make, and direct customers to guidance to help them correct these;

•        provide a reminder or prompt for a particular behaviour, for example a deadline or a debt.

This November, HMRC intends to send two separate sets of OTM communications, but because of the content, it is possible that many individuals will receive both.

The first is directed to those customers who weren’t previously domiciled in any part of the UK under common law and have become deemed UK domiciled for tax purposes under the new legislation introduced in the Finance Act 2017 and will explain that impacted customers are now taxed on the arising basis and will remind them that they need to declare all their worldwide income and gains on their UK tax returns, unless they have a specific exemption from doing so.

The letters aim to educate customers about the conditions for becoming deemed domiciled in the UK and gives customers the opportunity to consider their eligibility to help them to get their tax return right.

The second letter will be sent to customers to help them declare the correct residence position when filing their 2019-20 tax return, in particular to avoid making errors when customers declare themselves non-UK resident under the Statutory Residence Test (SRT). The letter aims to educate customers about the SRT and refer them to guidance to check their residence status and declare this correctly on their 2019-20 tax return. If customers continue to file incorrectly, then they may become the subject of future compliance checks by HMRC.

If you receive one or both of these letters and would like further advice on its implications for you, please get in touch with your usual contact at Maurice Turnor Gardner.

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